ACRC will remove unfair venue rental rules of charging the full payment for canceled reservation

- Rent fees should be fully refunded if cancelation is made before a certain date, which could relieve difficulties of the culture and art industry due to COVID 19 -

September 22, 2020

Anti-Corruption and Civil Rights Commission

The Republic of Korea

To relieve difficulties of the culture and art industry in the midst of the COVID-19 pandemic, improvement will be made on unfair and unreasonable rules regarding venue rental fees, which require the full payment even for canceled reservations as cancelation penalty.

The Anti-Corruption and Civil Rights Commission (ACRC, Chairperson Jeon Hyun-Heui) came up with a measure to enhance transparency in public venue rental and issued a recommendation thereon to organizations such as local government agencies and the Ministry of Culture, Sports, and Tourism. The related agencies are going to complete the implementation of the recommendation by September 2021.

Public organizations rent the cultural facilities they own and operate, such as the auditoriums, exhibition halls, outside stadiums, and outdoor stages, to private sector entities during the time when the facilities are not used, and charge them rental fees.

The ACRC conducted a nation-wide survey on the operation of such public cultural facilities. It turned out that at a time when the culture and art industry is having a huge difficulties after the government’s social distancing policies due to COVID-19, there were many cases where when a contract was canceled, the prepaid amount was not returned under the name of cancelation penalties.

So, the ACRC recommended rent bids should follow the Act on Contracts to which the State is a Party in terms of bidding notice period, qualification evaluation procedure, and other requirements. The tendering party is encouraged not to have pre-consultation with bidders and to receive bid applications online not offline.

When it comes to the assessment council for bidder qualification, outside members should make up more than 50 percent of the council members, and minuets and assessment results should be disclosed to secure transparency.

In addition, multi-layered fee scheme should not be imposed for the same facility, and gap among each scheme should be minimized. Renter’s margin should not be additionally charged as rental fees, as well.

Moreover, if cancelation is made before a certain designated date, the prepaid amount should be fully refunded. The upper limit for cancelation charges and contract deposits should not exceed 10 to 20 percent of the rental fees. As such, the ACRC took measures to set contract conditions more beneficial to renters compared to the ordinary contract condition.

Director General Gwon Seok-won of the Institutional Improvement Bureau of the ACRC said, “If ACRC’s institutional improvement measures are widely implemented, people in the culture and art industry and anyone having difficulties due to COVID 19 could be given opportunities to receive welfare services in the filed of culture and art in a fair and transparent way.”